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Tue 26 Jul 2011 04:10 PM

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Saudi gives $30.8m to cash-strapped Palestine

Budget gap had forced Palestinian Authority to slash government salaries in half

Saudi gives $30.8m to cash-strapped Palestine
Palestinian Prime Minister Salam Fayyad addresses the Jeddah Economic Forum

Saudi Arabia sent $30.8m to the Palestinian Authority to
help bridge a budget gap that forced the cutting of salaries in half, said
Jamal Shobaki, the Palestinian envoy to the kingdom.

“The Saudis informed us that they transferred the money,”
Shobaki said in a phone interview from Riyadh on Tuesday.

The move comes three weeks after Palestinian Prime Minister
Salam Fayyad said the authority was in a financial crisis, and singled out Arab
countries as he called on international donors to fulfill their commitments.

By the start of July, the authority had received $330m of
the $971m in aid pledged for 2011, Fayyad said at a July 3 press conference in
the West Bank city of Ramallah. About a quarter of the authority’s $3.7bn budget
comes from foreign aid.

Reduced salaries were sent July 6 to about 151,000 people on
the Palestinian Authority payroll, according to Accountant- General Yousef

Fayyad has been working to build government institutions as
the Palestinian Authority prepares to ask the United Nations in September to
recognize Palestine as an independent state, a move opposed by Israel and the US.

Oman, Algeria and the United Arab Emirates were the only
Arab countries that had paid funds pledged for this year, Fayyad said July 3.
He said the US and European Union have been making regular contributions.

The World Bank said in an April report that the Palestinian
Authority had increased bank borrowing to fund development projects for which
designated aid hadn’t been received, and that arrears were accumulating at an
unsustainable rate, close to the PA’s borrowing limits.